H&M sales rise as Russia clouds outlook

By guest author Georgia Wright from Retail Gazette

  • H&M sales rise despite the retailer’s outlook remaining uncertain amid the war in Ukraine
  • “Sales and profits for the quarter were impacted by the negative effects of the pandemic in many of the group’s major markets,” H&M said.
Captions courtesy by the Retail Gazette

H&M’s sales increased during its first quarter as the effects of Covid-19 being to ease, however, the closure of its Russian stores and the economic fallout from the ongoing war in Ukraine has made the retailer’s outlook more uncertain.

Sales rose 6% in local currencies in March compared with 23% growth in the three months through February, but these were down 11% from two years earlier, before the pandemic hit.

H&M said: “Sales and profits for the quarter were impacted by the negative effects of the pandemic in many of the group’s major markets.

“The result was also affected by increased growth-related initiatives, particularly within tech and the supply chain.”

Last year, when almost half of its stores were forced to close amid worldwide lockdowns, H&M made a 1.39 billion kronor loss. Two years ago, it made a 2.50 billion kronor profit

Alongside swathes of other retailers, H&M has temporarily closed its stores in Russia and expressed concerns about the “tragic developments in Ukraine”.

Russia was H&M’s sixth-biggest market with 4% of sales in the fourth quarter of 2021 and, while the group is reducing its global store numbers, it has been increasing its number of stores in Russia, to 170 at the end of November.

H&M’s sales halt in Russia follows a sharp drop in demand in China over the past year, related to the group making public concerns about workers’ rights in the Xinjiang cotton growing province. China had accounted for around 4% of H&M’s sales.

Back in January, H&M unveiled targets to double sales by 2030 as it heralded a “strong recovery” and plans to reach an operating margin of 10 % by 2024 – last year it reached 7.7 %.

Zara owner Inditex, the biggest fashion group in the world, grew sales 33% year-on-year, and 21% from the same period in 2019, in the six weeks from February 1.

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